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Rite Aid Gains on Health Dialog Buyout

Shares of drugstore chain retailer, Rite Aid Corporation (RAD) gained 1.9% yesterday after the company announced the acquisition of Boston-based Health Dialog Services Corporation from Bupa Ltd., a London-based healthcare company. The financial details of the deal have not been disclosed.

Health Dialog engages in providing coaching, analytics and support to make decisions in the healthcare industry. Rite Aid which competes with China Nepstar Chain Drugstore Ltd. (NPD) will operate the newly acquired company as a wholly owned subsidiary.

Rite Aid’s management revealed that the acquisition will help in the development of its Rite Aid Health Alliance program. Rite Aid Health Alliance is the company’s health management arm, under which it works together with different healthcare providers to offer holistic care to patients suffering from chronic or poly-chronic health problems.

Started in March this year, Rite Aid Health Alliance is currently available at the company’s Buffalo, NY, Greensboro, NC, and the greater Los Angeles area pharmacies.

We believe that the acquisition will benefit Rite Aid. The integration of Health Dialog will facilitate Rite Aid to grow its Rite Aid Health Alliance across all its stores. The move is expected to attract more customers to its drugstores.

Rite Aid, with a Zacks Rank #2 (Buy), is the third largest drugstore retailer in terms of number of stores after Walgreen Co. (WAG) and CVS Caremark Corp. (CVS). Rite Aid’s sustained focus on enhancing pharmacy and clinical services through the recently initiated Rite Aid Health Alliance or its Wellness+ customer loyalty program, along with the remodeling of wellness stores bode well for future growth. We believe that such measures will enable the company to broaden its customer base and boost the top and bottom lines.